Doc. You were too early on BOIL

Below is a screen shot of my scanner. Thursday, it was saying that BOIL had now become a ‘BUY’.


it’s been boiling for a few days now…


My charting program/scanner --Candle Power Plus (CPP)-- rarely gets things wrong.

On Dec 14th it flashed a clear “Buy” signal for BOIL. Prices followed through as predicted, then retested the low – but a higher low-- and then continued upward.

CPP is no langer sold or supported, which is regrettable. But the same sorts of signals can be derived using almost any charting template you want to put together So let’s scroll back the chart to Dec 1th.

Why is the candle hollow? Because prices closed up for the day. Why is the candle red? Because they closed lower than the previous day. (HINT: Ignore the flag marking the look-back low. It’s just eye candy, not meaningful info.) Do note the size of the candle relative to previous ones. Clearly, someone knew something and was trading on it. So the plan becomes, “Let’s wait and see what happens next.” But one’s expectation should be a retracement, which is exactly what happens on the 12th.

Now the guessing game beomes this. Have the sellers done selling? If so, then a reversal should be expected, and if one is an aggressive trader, buy at the next day’'s open on a Buy-stop order set just above the close.

Bingo!, We get in, and the market confirms our entry was correct. Now set a trailing stop and let the profits build.

What I’ve just described isn’t Quill’s Simon methods. It’s old-fashioned tape reading of the sort Justin Mamis lays out in his books, such as “The Nature of Risk” or that Jesse Livermore practiced back in the days of bucket shops.

The essence of the game is this. Who’s in charge? Buyers or sellers? What their next move? Yeah, fundamentals matter, and they are the reason the chart looks like it does. But it’s traders’ reactions that matter even more, and the game is to guess when to trade with them and when against them.